“Investment in artificial intelligence continues to astonish amid a technological arms race. Behold OpenAI's multibillion-dollar deal on Monday to buy chips from Advanced Micro Devices to power its data centers.
AMD's share price soared 24% on the news of its partnership with OpenAI, which is scrambling to build data centers to train and operate its models. It needs many more advanced chips, as do its competitors. AI chipmaking powerhouse Nvidia is struggling to keep up with demand.
Thus OpenAI's deal with AMD, which is better known for designing video-gaming chips. OpenAI has also signed a $10 billion deal with Broadcom to produce chips.
Nvidia commands a $4.55 trillion market valuation, but competition is growing as more chipmakers seek a slice of the gigantic pie. Morgan Stanley has projected some $3 trillion will be invested in the AI buildout in the next three years. By some estimates, AI investment was the biggest contributor to U.S. GDP growth in the first two quarters of this year.
Jeff Bezos made headlines on Friday when he heralded an AI "industrial bubble." There's no question valuations are stretched, reminiscent of the dot-com days. Who knows if OpenAI and other developers will be able to generate the revenue to pay for their massive investments. And some companies might fail.
But as the Amazon founder noted, "when the dust settles and you see who are the winners, society benefits from those inventions." It's far better that private markets drive investment than government, as was the case with the electric-vehicle bubble created during the Biden years.” [1]
1. The AI Arms Race Gets Even Hotter. Wall Street Journal, Eastern edition; New York, N.Y.. 07 Oct 2025: A16.
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